Remuneration is a sensitive topic, isn't it?
Remember when you were new to the industry and had to navigate this territory? Was the discomfort more intense when you hired your first employee? You don't want to pay too little and be insulting to the individual's skill set, but you also don't want to spend too much. Especially since this could increase operating costs of your business and potentially cripple your ability to grow. A company's growth is an interesting thing because we soon learn that growth is often hard on cash flow.
When I moved to Canada a few things came to light that I never really considered before then. Remuneration until then was typically considered an hourly rate and sometimes commission on product sales. Now I had to navigate complex options such as:
- A percentage split between owner and aesthetician/operator (usually a contractor agreement)
- The previous agreement with variations such as a different split for products and services.
- An hourly rate for service, plus commission on product sales (my familiar ground).
- The optional benefits plan as part of the remuneration package.
- TIPS! People tip here!
Despite the manner you choose to remunerate your employees there are is one thing that is a constant truth. If a staff member is costing more than 30% of the revenue they generate you are in a trouble zone. Consider more training to assist in giving them the skill set and capacity they need to bring that percentage to a place that works for your business. This can be a hard conversation to have. However, the focus is on success for both the employee and your company. Expectations need to be clear to all and rewards, such as a wage increase, is a good goal they can work towards.
I love keeping track of this percentage (referred to as wage percentage) and prefer a bonus system based on this percentage over a commission on products and/or services. Some healthy competition can be inspired by sharing these percentages with entire teams. If your team puts two and two together fast, they will start looking for ways to encourage those above it to hit the target.
One thing I feel quite strongly about is reception and support staff should not be on commission. The bonuses should be based on the overall business performance and the specific indicators set by the owner. Staff who are qualified to perform services should not be competing to complete sales against staff who are there to support their role. Both positions are significant for business survival, and their key performance indicators (KPI's) are entirely different, however, geared toward common goals. The business as a whole should also not exceed 30% wages of the revenue; if the whole team can maintain that... well, you can afford an annual celebration!
A final thought on remuneration, it is important to have individual goals with incentives for achieving them. These goals should be specific to the individual and related to what motivates them. Not everyone has the same motivators. For some, it will be money, for others time has more value. Some prefer to have help with further education or even ‘experience’ rewards like skydiving, or dinner in a revolving restaurant. Also, have team goals with incentives the whole team will receive or participate in. Communicate these in team meetings, individual performance reviews, and team development.
To your success!